Indian Cotton Federation has suggested that the Centre and banks restrict the interest rate for textile mills at 7 per cent as they need augmentation in financial limits to hold the crop to make the industry somewhat viable due to sluggish offtake of yarn and fabrics.
Similarly, the interest on cotton holding should be limited to 7 per cent for cotton growers, traders and government agencies like Cotton Corporation of India (CCI) to boost the industry and trade, ICF Vice President K N Vishwanathan said in a statement.
Stating that cotton arrivals were normal this season, with about 345 lakh bales already in the market, he said the stocks usually should be lying with the mills and traders.
However, this year, due to lean buying by domestic mills, more stocks had gone into the hands of the CCI, he said.
Cotton procured by CCI was of good quality and not low as feared by a section of the trade or mills and samples being displayed by the Maharashtra Federation also showed good quality.
Vishwanathan said international demand was very slow and restricted to some far eastern countries like Bangladesh and Vietnam.
China has been a non importer for quite some time now and is likely to be so for some more months, may be for next season also, Vishwanathan said.
There would not be a big spurt of buying from exporters and demand from domestic mills is limited to local yarn and fabric sales.
Considering this, there would not be big fluctuations in price in the market, he claimed.
Farmers are happy with the present MSP prices this year and would produce a similar big crop next season too, he said.
The current year is likely to end with a comfortable carry-over of good quality cotton and mills should purchase cotton judiciously, he suggested.
"What we now need very urgently is to support the textile industry to hold sufficient quantity of cotton as per their usual practise and at affordable interest rates of 7 per cent," he added.
